Research on Financial Risk Prevention in Corporate Mergers and Acquisitions

-- A Case Study of X Company Acquiring Y Company

Abstract

Over the past 40 years since the reform and opening up, enterprises have gone through a series of initiatives such as expanding business autonomy, contracting business responsibility system, establishing modern enterprise system, and implementing the action plan of reforming and improving quality, etc. At the present stage of development, the expansion of reproduction by endogenous accumulation alone can no longer adapt to the needs of the rapid growth of the enterprise and the competition in both international and domestic markets. Therefore, through mergers and acquisitions and other episodic expansion of reproduction, is an effective way to achieve low-cost expansion of enterprises and embark on a benign development track. In order to enhance the understanding of the financial risk of M&A, this paper, based on previous theoretical research results, combines relevant theories and methods, takes X enterprise's M&A of Y enterprise as a case study, analyses the financial risk involved, and puts forward the suggestions for controlling and preventing the financial risk.